Next Chancellor choice could have 'outsized' importance for the Pound

The pound has traded largely flat against the euro in the past week, and remains remarkably resilient to both the prospect of a change in the political status quo and the shift to the left under a more fiscally expansive Andy Burnham led government.

We have been surprised by the lack of reaction in UK assets to the growing likelihood that Energy Secretary Ed Miliband, rather than centrist Wes Streeting, lands the role as the next chancellor.

This may reflect one or both of the following: that his appointment is far from a done deal and may not be confirmed for some time, and that Burnham's commitment to the fiscal rules should, in theory, tie the hands of any occupant of Number 11, regardless of their personal economic instincts.

The rest of the week will be light on economic data out of the UK, so expect sterling to be driven largely by external developments - notably Thursday’s US jobs report - and ongoing headlines pertaining to the Labour leadership transition. Any firm signal on who will take the reins at the Treasury could, in particular, have an outsized importance for the pound.